As tempting as the scandals may be to dwell on, if we do not spend 51+% of our time focused on solutions, our problems associated with history's worst recovery will never get solved. Here is Rich Karlgaard at Forbes with a dose of economic common sense. I don't think economist Brian Wesbury would disagree with a word of this; he just currently makes a living helping people make money in a low growth / no growth economy.----------------

...growth is a moral requirement, for no other reason than that the opposite of growth is stagnation–a death of sorts.

Now to the economy: In round numbers the U.S. is a $16 trillion economy, which has been expanding at an annual 2% real (i.e., noninflationary) rate since June 2009. Each year we add $320 billion in real economic activity, which translates into 2 million to 3 million jobs and about $60 billion in federal tax receipts. We could use more jobs, and most of us want to cut the federal deficit and debt; therefore, growth is a good thing.

But the U.S. should be growing at 4% right now. Each year we should be adding $640 billion in new activity, creating 4 million to 6 million new jobs and adding $120 billion in federal tax receipts. Why 4% growth? America has averaged 3% growth since World War II, but during those 68 years we have suffered 11 recessions, including the 2007-09 whopper. When the country isn’t in recession, 4% annual growth is quite normal.

Too many economists and pundits have thrown in the towel, saying that 4% growth is no longer possible. This argument is based on two factors: the law of large numbers (i.e., 4% growth off of a $16 trillion base is much harder to reach than 4% growth off of a $5 trillion base) and the generational problems we face (a growing part of the U.S. population is either too young or too old to work to add to our statistical productivity).

We face challenges, of course, but getting back to 4% nonrecessionary growth is a moral requirement, and we must find ways to do this. If we care at all about jobs and deficits, choosing the right policy levers to lift economic growth should be the country’s highest priority.

So what kind of policy would get us from 2% growth to 4% (aiming for a long-term 3% to cover the inevitable downturns)? Lower, flatter and simpler taxes. Sensible regulation. Stable currency. Entitlement reform. A true health care revolution hitched to technological progress, entrepreneurial energy and market pricing. That should do it. (more at the link above)

Krugman could go always go under under cognitive dissonance of the left (but I'll put it here) and this thread could be closed after the Obama years because is there really any debate left about how to or how not to run an economy?

This caught my attention because really he is refuting Wesbury:

He calls the economy "depressed". "We really should be adding more than 300,000 jobs a month, not fewer than 200,000. As the Economic Policy Institute points out, we would need more than five years of job growth at this rate to get back to the level of unemployment that prevailed before the Great Recession. Full recovery still looks a very long way off. And I’m beginning to worry that it may never happen."

"Ask yourself the hard question: What, exactly, will bring us back to full employment?"

He then goes on with the same drivel. We won't recover because people don't want large enough fiscal or monetary stimuli.

"After six years during which hardly any new homes were built in America, housing is trying to stage a comeback. So yes, the economy is showing some signs of healing itself. But that healing process won’t go very far if policy makers stomp on it, in particular by raising interest rates."

The WSJ gets back into stride after a short, illegal immigration diversion. First my question and answer key to reading their chart:

What changed in America triggering the economy nosedive in employment and income? The end of 2006 and the beginning of 2007 marked the election and swearing in of the Pelosi-Reid-Obama-Hillary-Biden majorities in congress, signaling the end of what few pro-growth policies this nation had left. The main economic impetus was to end the unfair inequities of a growth economy. How is that working out?

"If only Mr. Obama (and his voters!) understood that before a government can redistribute wealth, the private economy has to create it."

The Inequality PresidentThe rich have done fine under Obamanomics, not so the middle class.

President Obama made his fourth or fifth, or maybe it's the seventh or eighth, pivot to the economy on Wednesday, and a revealing speech it was. We counted four mentions of "growth" but "inequality" got five. This goes a long way to explaining why Mr. Obama is still bemoaning thestate of the economy five years into his Presidency.

The President summed up his economic priorities close to the top of his hour-long address. "This growing inequality isn't just morally wrong; it's bad economics," he told his Galesburg, Illinois audience. "When middle-class families have less to spend, businesses have fewer customers. When wealth concentrates at the very top, it can inflate unstable bubbles that threaten the economy. When the rungs on the ladder of opportunity grow farther apart, it undermines the very essence of this country."

Then the heart of the matter: "That's why reversing these trends must be Washington's highest priority. It's certainly my highest priority."

Which is the problem. For four and a half years, Mr. Obama has focused his policies on reducing inequality rather than increasing growth. The predictable result has been more inequality and less growth. As even Mr. Obama conceded in his speech, the rich have done well in the last few years thanks to a rising stock market, but the middle class and poor have not. The President called his speech "A Better Bargain for the Middle Class," but no President has done worse by the middle class in modern times.

By now the lackluster growth figures are well known. The recovery that began four years ago has been one of the weakest on record, averaging a little more than 2%. And it has not gained speed. Growth in the fourth quarter of 2012 was 0.4%. It rose to a still anemic 1.8% in the first quarter but most economists are predicting even slower growth in the second quarter.

We hope the predictions of a faster growth in the second half will be right, but the Obama Treasury and Federal Reserve have been predicting for four years that takeoff was just around the corner. Stocks are doing great, and housing prices are rising, but job growth remains lackluster. What has never arrived is the 3%-4% growth spurt during typical expansions.

The official excuse is that recoveries coming out of recessions caused by financial crises are always slow. But then why have we been told every few months for five years that faster growth would soon be coming? Perhaps readers recall former Treasury Secretary Tim Geithner's famous 2010 op-ed, "Welcome to the Recovery." Mr. Obama wants it both ways: Take credit for recovering from recession, but blame that recession ad infinitum for the slow pace of the recovery.

What about the middle class that is the focus of Mr. Obama's rhetoric? Each month the consultants at Sentier Research crunch the numbers from the Census Bureau's Current Population Survey and estimate the trend in median annual household income adjusted for inflation. In its May 2013 report, Sentier put the figure at $51,500, essentially unchanged from $51,671 a year earlier.

And that's the good news. The bad news is that median real household income is $2,718, or 5%, lower than the $54,218 median in June 2009 when the recession officially ended. Median incomes typically fall during recessions. But the striking fact of the Obama economy is that median real household income has fallen even during the recovery.

While the declines have stabilized over the last two years, incomes are still far below the previous peak located by Sentier of $56,280 in January 2008. No wonder Mr. Obama is now turning once again to his familiar political narrative assailing inequality and blaming everyone else for it. He wants to change the subject from the results on his watch.

The core problem has been Mr. Obama's focus on spreading the wealth rather than creating it. ObamaCare will soon hook more Americans on government subsidies, but its mandates and taxes have hurt job creation, especially at small businesses. Mr. Obama's record tax increases have grabbed a bigger chunk of affluent incomes, but they created uncertainty for business throughout 2012 and have dampened growth so far this year.

The food stamp and disability rolls have exploded, which reduces inequality but also reduces the incentive to work and rise on the economic ladder. This has contributed to a plunge in the share of Americans who are working—the labor participation rate—to 63.5% in June from 65.7% in June 2009. And don't forget the Fed's extraordinary monetary policy, which has done well by the rich who have assets but left the thrifty middle class and retirees earning pennies on their savings.

Mr. Obama would have done far better by the poor, the middle class and the wealthy if he had focused on growing the economy first. The difference between the Obama 2% recovery and the Reagan-Clinton 3%-4% growth rates is rising incomes for nearly everybody.

House Republicans have put a check on Mr. Obama's most destructive economic policies, but the President could do more to help growth if he crossed party lines to pass tax reform the way Reagan did in his second term, or to work out a budget deal as Bill Clinton did in his fifth year.

Mr. Obama's only pro-growth proposal is immigration reform, and we're not sure he wants even that to pass. Judging by the partisan tenor of his Wednesday speech, he may be setting it up to use as a campaign wedge in 2014. If only Mr. Obama understood that before a government can redistribute wealth, the private economy has to create it.

According to Larry Gatlin of the legendary country group the Gatlin Brothers, the definition of bankruptcy is: "When your outgo exceeds your income, your upkeep will be your downfall." And boy, does Detroit fit that definition.

But the origins of Detroit's bankruptcy are far from unique or exclusively Detroit's fault.

And while Detroit's corruption-ridden city government and unfunded pension-fund liabilities are the proximate cause of the Michigan city's bankruptcy, the root causes are far deeper. Detroit is the first of a number of triple witching events.

First of all, Motown is part of the American economy, which is experiencing the slowest recovery from the second worst recession/depression in the past century. The prolonged downturn and its depth are consequences of the massive expansion of stimulus spending during Bush's second term and Obama's first term.

Milton Friedman was quick to remind people that government stimulus spending is taxation and a prosperity killer. Governments don't create resources; they redistribute resources. While tax rates were raised during the Great Recession, they were raised a lot more during the Great Depression, which explains the difference in severity between the Great Depression of the 1930s and the modern Great Recession. To push this point home, the highest marginal income-tax rate in 1931 was 25% and by 1938 it was 83%. Whoever heard of an economy being taxed into prosperity?

Obama Tax Hikes

President Obama raised the highest personal income-tax rate to 42%, raised the federal estate tax, upped the payroll tax — and now we have the prospects of greatly increased taxes as a result of ObamaCare. The U.S. has the highest corporate tax rate in the OECD at 35%, which is the only corporate tax levied on global income, meaning that profits earned abroad by U.S. corporations have to pay the full U.S. tax upon repatriation after a credit for foreign taxes paid. As a consequence, total employment as a share of the U.S. population has hovered in the 58.5% range for four years now with no sign of improvement, down from well over 63% in 2006. Real GDP growth over the past four years since the economy troughed has averaged only 1.8%, well below the 2.5% rate needed for the economy to show improvement.

Steering The Motor City Wrong

The U.S. corporate tax structure is especially important for Detroit because the auto industry is global. German, Japanese, Korean, Italian and French autos sold in countries other than the U.S. pay at most the highest corporate tax in those countries, while U.S. companies are always liable for their U.S. 35% corporate tax rate plus city and state corporate taxes, which in Detroit are serious.

No real solution for Detroit's bankruptcy is possible without a solution to our nation's stagnation.

Secondly, Detroit is part of Michigan, which over the past decade (2001 through 2011) has had the lowest growth, bar none, in population of all the 50 states: -1.2% vs. the U.S. average of 9.5%. Michigan's labor force growth, employment growth, productivity growth, gross state product growth, state and local tax revenue growth and income per capita growth are all the very lowest in the nation. Yikes!

In 1967, under Gov. George Romney's leadership, Michigan initiated a state income tax, initially setting the highest rate at 2.6% using federal adjusted gross income (AGI) as its tax base. The state's income tax rate peaked in 1983 at 6.35% and is now down to 4.25%. Even though a 4.25% maximum tax rate is a lot better than a 6.35% tax rate, those towering tax rates have surely damaged today's Michigan economy. The state's corporate tax rate stands at 6%. These unwarranted burdensome taxes on business surely have added to Detroit and Michigan's decline. Again, there's no real solution for Detroit that doesn't include tax reform in Michigan.

High Labor Cost, Little Labor

If all of this weren't enough to doom Detroit, add to it that Michigan and Detroit are highly unionized and have a minimum wage above the federal minimum wage. Gov. Rick Snyder and the state's legislature recently passed right-to-work legislation, so there is progress.

Worst of all, hear this: Using full-time equivalent employees per 10,000 of population in state and local governments as a way to measure such public services as education, police protection, fire protection, public welfare, hospitals, corrections and highways, Michigan — and thereby Detroit — ranks third lowest in the nation and 12% below the national average. In police protection personnel per 10,000 population alone, Michigan is dead last in the nation. Is it any wonder that Detroit is No. 1 for violent crime among any U.S. city with over 200,000 people? In spite of being right at the bottom of the public service ladder, Michigan pays its state and local government employees 5% above the U.S. pay average and has enormously generous retirement and health benefits. It's another double whammy: overpaid public servants and too few of them. In order to pay for poor service, by the end of 2013 Detroit will have closed 260, or over 80%, of its parks.

SOS For Positive Legislation

The high cost and lack of benefits of being located in Michigan, and especially in Detroit, incentivize people and businesses to locate elsewhere. Again, no Detroit cure is possible without total reform in state and local government spending.

Then we come to Detroit itself. In 1962, Motown adopted a 1% net income tax for residents and 0.5% for nonresident income earners. In 1964, the city initiated a 1% corporate tax as well. Detroit's income tax stands at 2.4% today, and the corporate tax is 2%. Businesses that can locate outside Detroit do. In 1950, 1.85 million people lived in Detroit. Today the population of Detroit would be lucky to top 700,000. You can't balance a budget on people who leave or are unemployed.

Imagine a boiler's heat is turned way up, its safety valves are shut off and you tap the boiler every five minutes with a little brass tap hammer. By turning the boiler's heat way up and shutting off the safety valves, you have guaranteed the boiler will explode. By tapping the boiler every five minutes with a little brass tap hammer, you're guaranteed you'll be there when the explosion occurs. Such is the case with Detroit. But let us assure you: While Detroit is the worst and the first, it won't be the last or the biggest.

How's the left-wing, ivory-tower, we-know-best elitist Obamanomics working for you? Here's the news.

First-quarter gross domestic product numbers for 2013 were recently revised -- downward from 1.8 percent to 1.1 percent. For perspective, four years into the recovery from the last deep recession in '81-'82, the economy grew at 4.1 percent.

What about the declining "labor force participation rate"?

This counts the percentage of civilians 16 years and older working or actively looking for work. When President Barack Obama took office, the labor force participation rate was 65.7. Today it is 63.4, up 0.1 from April's 34-year low. Frustrated, many able-bodied and able-minded would-be workers have simply given up looking for jobs.

The number of people receiving federally subsidized food assistance today exceeds the number of full-time, private-sector working Americans. The number of Americans receiving foods stamps (now called SNAP) has reached 47.5 million, increasing an average of 13 percent a year from 2008 to 2012. Almost 9 million disabled American workers currently collect federal Social Security benefits -- double the number of disabled in the late '90s -- many admitting that they could work, but choose not to look.

Just to break even -- to keep pace with new entrants into the market -- the economy must produce 150,000 jobs per month. To date, Obama's four years of recovery have produced 4,657,000 jobs -- an average of 97,020 per month. At this juncture in the '80s, following the last big recession, the economy had produced 11.2 million new jobs, or 233,333 per month.

Even left-wing media outlets like ABC and The Washington Post cannot pretend that this is normal. About the advance estimate of the most recent quarter's dismal 1.7 percent growth, a Post business writer said: "It isn't even mediocre. It's terrible. It's a sign of the diminished economic expectations ... that it's anything to crow about at all. ABC called this latest report "disappointing." Of course, neither ABC nor The Washington Post attributed the disappointing results to anything President Obama has done.

But President Ronald Reagan took an entirely different course than has Obama. Reagan dramatically lowered taxes, reduced the speed of domestic spending and continued deregulation policies of Jimmy Carter. The economy took off, and three years into recovery, had produced an 8.9 percent increase in civilian employment -- almost 9 million jobs, with a post-recovery GDP that averaged over 5 percent.

The Reagan recovery was no aberration. Spending and tax cuts between 1922 and 1929 gave us the so-called "roaring '20s," when unemployment fell from 6.7 percent to 3.2 percent, and real gross national product grew at an annual average rate of 4.7 percent. Similarly, when President George W. Bush lowered taxes, the economy took off, and the unemployment rate went down to a low of 4.4 in 2006.

Democrats brag about the robust Clinton economy. But President Bill Clinton inherited an economy in its 22nd month of recovery. And Democrat historians ignore the economy-damaging measures that Clinton attempted -- most notably HillaryCare -- but could not pull off because Republicans stopped him.

Seventy-four percent of small-business owners say they plan to reduce hours, put off hiring or fire people to minimize the impact of ObamaCare. ObamaCare kicks in at 50 employees and applies to full-time workers.

So employers keep the number of workers under 50 and-or reduce hours to less than full-time (30 hours or more), and they get around ObamaCare. What this does to the economy and job creation is another story.

In 2009, Obama's economic team outlined the path of the economy "if we do nothing" versus the path of the economy with Obama's plans for stimulus and ObamaCare. Team Obama predicted an unemployment rate, at this point in the recovery, of 5 percent -- with his "stimulus." If Obama did nothing, they predicted, unemployment would reach 5 percent by the beginning of 2014. Today unemployment is at 7.4 percent, artificially low considering the number of people who have given up.What will it take for them to say they were wrong? How many more Americans must remain unemployed or underemployed before the left stops blaming G.W. Bush, the GOP-led House or global warming?

Historically, the deeper the recession, the higher the bounce back. Since World War II, this recovery has been by far the weakest. The question is why.

Our history shows that burdening the productive through higher taxes, especially during sluggishness, hurts the economy. Imposing billions of dollars in new federal regulations, as this administration has done, hurts the economy. Placing nearly one-seventh of the nation's economy -- via ObamaCare -- under the control of the federal government hurts the economy.

This is an arrogant administration led by a man distrustful of the private sector and devoid of experience in it. Obama is cheered and emboldened by a compliant media that would "report" relentlessly on the "jobless recovery of President X" were these the economic numbers of a Republican president. Stacked with power-assuming administrative "czars," the Obama administration fancies itself enlightened and noble, in complete possession of the wisdom needed to know from whom to take and to whom to give.

Therefore, to paraphrase former Secretary of State Hillary Clinton, "What difference do these bad numbers make?"

Earlier this year, economist Yasheng Huang (watch his 2011 TED Talk) sparred with Eric X. Li in the pages of Foreign Affairs on a similar topic to today’s TED Talk. The TED Blog asked Huang to expand on his argument in his ongoing conversation with Li.

Imagine confusing the following two statements from a cancer doctor: 1) “You may die from cancer” and 2) “I want you to die from cancer.” It is not hard to see a rudimentary difference between these two statements. The first statement is a prediction — it is saying that something may happen given certain conditions (in this case death conditional upon having cancer). The second statement is a preference, a desire, or a wish for a world to one’s particular liking.

Earlier this year, economist Yasheng Huang (watch his 2011 TED Talk) sparred with Eric X. Li in the pages of Foreign Affairs on a similar topic to today’s TED Talk. The TED Blog asked Huang to expand on his argument in his ongoing conversation with Li.

Imagine confusing the following two statements from a cancer doctor: 1) “You may die from cancer” and 2) “I want you to die from cancer.” It is not hard to see a rudimentary difference between these two statements. The first statement is a prediction — it is saying that something may happen given certain conditions (in this case death conditional upon having cancer). The second statement is a preference, a desire, or a wish for a world to one’s particular liking.

Can you imagine the uproar if Republican policies hit these groups in America this harshly!------------------------------Obama's Economy Hits His Voters HardestYoung people, single women and minorities have fared the worst during the past four years.

By STEPHEN MOORE

For better or worse, a truism of American politics is that voters vote their pocketbooks. Yet according to a new report on median household incomes by Sentier Research, in 2012 millions of American voters apparently cast ballots contrary to their economic self-interest.

Each month the consultants at Sentier analyze the numbers from the Census Bureau's Current Population Survey and estimate the trend in median annual household income adjusted for inflation. On Aug. 21, Sentier released "Household Income on the Fourth Anniversary of the Economic Recovery: June 2009 to June 2013." The finding that grabbed headlines was that real median household income "has fallen by 4.4 percent since the 'economic recovery' began in June 2009." In dollar terms, median household income fell to $52,098 from $54,478, a loss of $2,380.

What was largely overlooked, however, is that those who were most likely to vote for Barack Obama in 2012 were members of demographic groups most likely to have suffered the steepest income declines. Mr. Obama was re-elected with 51% of the vote. Five demographic groups were crucial to his victory: young voters, single women, those with only a high-school diploma or less, blacks and Hispanics. He cleaned up with 60% of the youth vote, 67% of single women, 93% of blacks, 71% of Hispanics, and 64% of those without a high-school diploma, according to exit polls.

According to the Sentier research, households headed by single women, with and without children present, saw their incomes fall by roughly 7%. Those under age 25 experienced an income decline of 9.6%. Black heads of households saw their income tumble by 10.9%, while Hispanic heads-of-households' income fell 4.5%, slightly more than the national average. The incomes of workers with a high-school diploma or less fell by about 8% (-6.9% for those with less than a high-school diploma and -9.3% for those with only a high-school diploma).

This is a stunning reversal of the progress for these groups during the expansions of the 1980s and 1990s, and even through the start of the 2008 recession. Census data reveal that from 1981-2008 the biggest income gains were for black women, 81%; followed by white women, 67%; followed by black men, 31%; and white males at 8%.

In other words, the gender and racial income gaps shrank by more than in any period in American history during the Reagan boom of the 1980s and the Clinton boom of the 1990s. Women and blacks continued to make economic progress during the mini-Bush expansion from 2002-07. "Income inequality" has been exacerbated during the Obama era.

Mr. Obama has often contemptuously, and wrongly, branded the quarter-century period of prosperity beginning with the presidency of Ronald Reagan as a "trickle down" era. For many in the groups that Mr. Obama set out to help, a return to the prosperity of that era would be a vast improvement.

The Census Bureau data on incomes include cash government benefits, such as unemployment insurance, disability payments and the earned-income tax credit (but excludes Medicaid and food stamps). Most of the cash programs have surged in cost during the Obama presidency, yet incomes have still declined for the lowest-income eligible groups. This suggests that wages and salaries from employment have shrunk at an even faster pace than the Census data show. The shrinking paychecks of the past four years are consistent with two unwelcome anomalies of the recovery: a swift decline in labor-force participation to 63.4% from 65.5% during that period and a rise in part-time employment.

What all of this means is that the stimulus-led economic revival that began officially in June 2009—Vice President Joe Biden's famous "summer of recovery"—has only resulted in lower incomes for at least half of Americans, the very ones who were instrumental in electing Mr. Obama twice.

The president's announced economic policy goal, as well as that of progressives generally, is to spread the wealth. The left seems to have forgotten that when fewer American businesses and workers are creating wealth in the first place, something else is spread instead: misery.

It is good to see that prominent WSJ contributors, including my current favorite economist, reading the forum.

"The policies favored by those with a middle-out view—higher tax rates, more intrusive regulations, more targeted fiscal policies—will not revive the economy. More likely they will perpetuate the weak economy we have and cause real incomes—including for those in the middle—to continue to stagnate."

The Weak Recovery Explains Rising Inequality, Not Vice VersaObama blames tax cuts that began under Reagan for today's slow growth. The data don't back him up.

By JOHN B. TAYLOR, professor of economics at Stanford University and a senior fellow at the Hoover Institution.

Last year at this time a debate raged about whether economic growth and job creation has been abnormally slow compared with previous recoveries from recessions in the United States. Now that the growth rate has declined to 1.6% over the past year from 2.8%, the debate is no longer about whether. It's about why.

The poor economic policies of the past few years is a reasonable explanation for today's weak economy. Fiscal policy has at best provided temporary stimulus before fading away with no sustainable impact on growth. More costly and confusing regulations—including the many mandates in the Affordable Care Act and the Dodd-Frank Act—have reduced the willingness of firms to invest and hire. The Federal Reserve has employed a variety of unconventional and unpredictable monetary policies with not very successful results.

The administration and its supporters are not about to blame the slow recovery on its own policies, or those of the Fed. Instead, President Obama and his supporters have been talking about "an economy that grows from the middle out," as he put it in Galesburg, Ill., in July. The fashionable middle-out view blames today's troubles on policies that took root in Ronald Reagan's administration.

The 1980s and '90s experienced a declining trend in unemployment rates, milder and less frequent recessions, and a lower inflation rate—all of which disproportionately benefited people with middle and lower incomes, especially compared with the 1970s. These decades were also characterized by widening inequality. The reason? "Washington," as Mr. Obama asserted in Galesburg, "doled out bigger tax cuts to the very wealthy and smaller minimum wage increases for the working poor."

Weak economic growth today, according to the middle-out view, is the consequence of a wider distribution, or dispersion, of income (more at the upper end). This growth in inequality, the argument goes, is the consequence of tax cuts since the 1980s, a trend toward deregulation (that actually began under the Carter administration), and fewer targeted federal programs.

The key causal factor of the middle-out view is that a wider income distribution slows economic growth by lowering consumption demand. Saving rates rise and consumption falls if the share of income shifts toward the top, according to middle-out reasoning, because people with higher incomes tend to save more than those with lower incomes.

The data for the recovery since mid-2009 do not support this view. The 5.4% overall savings rate during this recovery is not high compared with the 8.4% average since 1960. It is relatively low compared to past recoveries, such as the 9.3% savings rate during a comparable period during the recovery in the early 1980s.

Moreover, data do not support the view that tax cuts in the past 30 years are responsible for the widening income distribution. According to the Congressional Budget Office, the distribution of market income before taxes widened in the 1980s and '90s by about as much as the distribution of income after taxes.

The middle-out view fails to explain the weak economy and high unemployment today. It also fails to explain the strong economy and low unemployment in the 1980s and '90s.

Widening income distribution can be a concern, however, especially if it signals reduced income mobility and a growing inequality of opportunity. Consider data collected by Berkeley economist Emmanuel Saez for the upper 10% and the lower 90% of the income scale. From the end of World War II until the mid-1960s, real income growth was strong for both groups and there was relatively little change in the distribution of income.

In the late 1960s and 1970s the growth of real income slowed dramatically for both groups, coinciding with the terrible economic policy of that period. Income growth sped up in the 1980s and '90s but was faster in the upper-income group than in the lower-income group. This is the period of the widening of the distribution. According to the latest data collected by Mr. Saez, real income of both groups has recently stagnated.

What caused the differential income growth in the 1980s and 1990s? Research shows that the returns to education started increasing in the 1980s. For example, the wage premium for going to college compared to high school increased. But the supply of educated students did not respond to the increase in returns. High-school graduation rates were declining in the 1980s and '90s and have moved very little since then. Test scores of American students fell in international rankings. With little supply response, the returns to those with the education rose more quickly, causing the income distribution to widen.

Apparently many people just don't buy the "trickle down" theory as an answer to this as it is now. If they did Republicans would be way out in front. How does the right address this vs. big gov paychecks? Again ccp's commandment: Whoever can address this can win any election:

(AP) In this 1928 file photo, Actress Joan Crawford is seen dancing the Charleston in "Our...

WASHINGTON (AP) - The gulf between the richest 1 percent and the rest of America is the widest it's been since the Roaring '20s.

The very wealthiest Americans earned more than 19 percent of the country's household income last year - their biggest share since 1928, the year before the stock market crash. And the top 10 percent captured a record 48.2 percent of total earnings last year.

U.S. income inequality has been growing for almost three decades. And it grew again last year, according to an analysis of Internal Revenue Service figures dating to 1913 by economists at the University of California, Berkeley, the Paris School of Economics and Oxford University.

One of them, Berkeley's Emmanuel Saez, said the incomes of the richest Americans surged last year in part because they cashed in stock holdings to avoid higher capital gains taxes that took effect in January.

(AP) Graphic shows the top 1 percentâ€™s share of total U.S. earnings over the last century; 2c x 3...Full Image

In 2012, the incomes of the top 1 percent rose nearly 20 percent compared with a 1 percent increase for the remaining 99 percent.

The richest Americans were hit hard by the financial crisis. Their incomes fell more than 36 percent in the Great Recession of 2007-09 as stock prices plummeted. Incomes for the bottom 99 percent fell just 11.6 percent, according to the analysis.

But since the recession officially ended in June 2009, the top 1 percent have enjoyed the benefits of rising corporate profits and stock prices: 95 percent of the income gains reported since 2009 have gone to the top 1 percent.

That compares with a 45 percent share for the top 1 percent in the economic expansion of the 1990s and a 65 percent share from the expansion that followed the 2001 recession.

The top 1 percent of American households had pretax income above $394,000 last year. The top 10 percent had income exceeding $114,000.

The income figures include wages, pension payments, dividends and capital gains from the sale of stocks and other assets. They do not include so-called transfer payments from government programs such as unemployment benefits and Social Security.

The gap between rich and poor narrowed after World War II as unions negotiated better pay and benefits and as the government enacted a minimum wage and other policies to help the poor and middle class.

The top 1 percent's share of income bottomed out at 7.7 percent in 1973 and has risen steadily since the early 1980s, according to the analysis.

Economists point to several reasons for widening income inequality. In some industries, U.S. workers now compete with low-wage labor in China and other developing countries. Clerical and call-center jobs have been outsourced to countries such as India and the Philippines.

Increasingly, technology is replacing workers in performing routine tasks. And union power has dwindled. The percentage of American workers represented by unions has dropped from 23.3 percent in 1983 to 12.5 percent last year, according to the Labor Department.

The changes have reduced costs for many employers. That is one reason corporate profits hit a record this year as a share of U.S. economic output, even though economic growth is sluggish and unemployment remains at a high 7.2 percent.

America's top earners tend to be highly paid executives or entrepreneurs - the "working rich" - instead of elites who enjoy lives of leisure on inherited wealth, Saez wrote in a report that accompanied the new analysis.

Still, he added: "We need to decide as a society whether this increase in income inequality is efficient and acceptable." *****

Chancellor's Professor of Public Policy, University of California at Berkeley; Author, 'Beyond Outrage'

Forbes magazine likes to call itself a "capitalist tool," and routinely offers tool-like justifications for whatever it is that profit-seeking corporations want to do. Recently it has deployed its small army of corporate defenders and apologists in the multi-billion dollar fight to keep the effective tax rates of global corporations low.

One of its contributors, Tim Worstall, recently took me to task for suggesting that a way for citizens to gain some countervailing power over large global corporations is for governments to threaten denial of market access unless corporations act responsibly.

He argues that the benefits to consumers of global corporations are so large that denial of market access would hurt citizens more than it would help them. The "value to U.S. consumers of Apple is they can buy Apple products," Worstall writes. "Why would you want to punish U.S. consumers, by banning them from buying Apple products, just because Apple obeys the current tax laws?"

Wortstall thereby begs the central question. If global corporations obeyed all national laws -- the spirit of the laws as well as the letter of them -- and didn't use their inordinate power to dictate the laws in the first place by otherwise threatening to take their jobs and investments elsewhere, there'd be no issue.

It's the fact of their power to manipulate laws by playing nations off against one another -- determining how much they pay in taxes, as well as how much they get in corporate welfare subsidies, how much regulation they're subject to, and so on -- that raises the question of how citizens can countermand this power.

Consumer benefits may sometimes exceed such costs. But, as we've painfully learned over the years (the Wall Street meltdown, the BP oil spill in the Gulf, consumer injuries and deaths from unsafe products, worker injuries and deaths from unsafe working conditions, climate change brought on by carbon dioxide emissions, and, yes, manipulation of the tax laws -- need I go on?), the social costs may also exceed consumer benefits.

Why would an economics writer for a seemingly sophisticated national publication such as Forbes deny the existence of corporate power to circumvent or create favorable laws, or dismiss the social costs that corporations bent solely on maximizing profits routinely disregard? I'll get back to this in a moment.

Worstall then goes on to criticize me for suggesting that governments also condition market access on receiving some of the social benefits that corporations now wield to play countries off against one another, such as good jobs or investments in research and development. In his eyes, I'm committing the mortal sin of denying the economics of comparative advantage.

On what planet have Forbes' capitalist tools been living? Many of the world's most successful economies -- among them, China and Singapore -- owe their successes in part to their conditioning market access on certain kinds of jobs and investments, including research and development. That's the way they have come to use global corporations, rather than be used by them. It's the same approach Alexander Hamilton advocated more than two centuries ago in proposing how the United States develop its manufacturing industries.

Comparative advantage is nice in theory, but in a world where powerful global corporations are using every strategy imaginable to maximize their profits and powerful governments are strategically employing market access to develop their economies, it's just theory.

Economics writers like those affiliated with Forbes magazine surely are sophisticated enough to know this as well. So why are they so eager to trot out such economic nonsense?

Perhaps because so much profit is at stake that those who pay their salaries -- and who have also put many academic economists on retainers -- prefer that they mislead the public with simplistic economic theory that appears to justify these profits rather than to tell the truth.

My modest suggestion that governments become the agents of their citizens in bargaining with global capital should hardly raise an eyebrow. But the capitalist tools at Forbes, and elsewhere, must be worried that average citizens may be starting to see what's really going on, and might therefore take such a suggestion seriously.

ROBERT B. REICH, Chancellor's Professor of Public Policy at the University of California at Berkeley, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest is an e-book, "Beyond Outrage," now available in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause.

before those in the 75% of the country who reportedly live from pay check to pay check hear a concise coherent response from Republicans that addresses how they languish while 1% keep getting wealthier. And no it is not just the rich are stealing, though many do, but the economy, the "system" is not working for the bulk of America. It is not simply a lack of good education in my view which is the standard come back.

If Republicans want to gain any real share of minorities, Asians, Latinos who are on the low rung of the economic ladder or who come from counties with more socialistic government, or who are for whatever reason obsessed with race, or who keep having babies they cannot afford, they better do a Freaking better job at addressing this. No one has yet. Including the talking bean bags on talk radio.

I will keep hammering this point the only way I know how. On this board. What is the best thing to tell children to do today. The best job is lobbyist or run for political office. You want to get rich go to DC! The revolving door between Wall Street the media and what used to be public service.... Only a part of the problem though. But a good display at the advantages those with influence, money have that the majority don't. I grew up in a house hold that was not really one party or the other but where my parents voted for who they thought was the best candidate for America and probably for them. I have always trended to the Republican party and still do. I am even further to the right. Yet I am baffled and annoyed how Republicans cannot or will not address the underlying challenge before them. Perhaps they can't.

*****Poll: Obama holds lead in fight for middle class vote

By Rose Gordon Sala via Lean Forward

Thu Aug 23, 2012 10:13 AM EDT.

A little more than half of the middle class believe President Obama's policies will improve their situation, according to a new Pew Research Center report. Fifty-two percent prefer Obama's policies to the 42% who said Republican candidate Mitt Romney would aid the middle class.

Figures from an NBC-Wall Street Journal poll last month showed a similar lead by the president in winning the middle class. It found that 49% of voters believe Obama's policies look out for the middle class, compared to 33% that believe Romney does—a 16-point advantage. A whopping 80% of those respondents said they would vote for the candidate they believe will strength the middle class. Interesting, because a new Obama campaign ad released Thursday has the popular former President Clinton promising that Obama's economic plan will do just that.

This doesn't mean the president's path to re-election is a simple skip down the yellow-brick road. Indeed, only 44% of voters in the NBC/WSJ poll approve of his handling of the economy (though up 2% from the prior month).

While both campaigns profess their dedication to strengthening and improving the middle class, the number of those who possess a middle class income are dwindling as more people join the ranks of the poor and the wealthy, increasing America's income disparity, Pew found. In 2011, 51% of adults were considered middle class, a 10-percentage point drop from 1971 when 61% were middle class.

While upper-incomers wealth held steady over the last decade, the middle class' median net worth fell by $36,432 (see chart).

--------------------------------------------------------------------------------And they aren't happy. Eighty-five percent of those who identify as middle class say it is more difficult for them to maintain their standard of living today than it was a decade ago. Who do they blame for this? Politicians and a few other culprits. •62% blame Congress•54% blame banks and financial institutions•47% blame corporations•44% blame the Bush administration•39% foreign competition•34% blame the Obama administration

In discussing the Pew report this morning, conservative Morning Joe host Joe Scarborough blamed both parties for the "depressing" news. "It's all B.S.," he said. The rich are getting richer and the poor are getting poorer because for 40 years our economy has been changing...We had an IT revolution that displaced a lot of people."

"The political parties are just stupid in their simple-minded solutions," Scarborough continued while pointing to tax reform suggested by each candidate for president.*****

1) Fracking 2) A better health care approach than Obamacare. See our Health Care thread. Know that as if fks up, the Dems are going to propagandize for single payer. 3) Radical change to the tax code. This needs to be thought out, but what occurs to me is to shatter the paradigm and tax pollution and abolish all taxes of jobs, savings, income, investment, etc.

Isn't is interesting that this trend was unstoppable even by gaining control of first congress, then all three bodies, a Supreme Court backing them up and a then second term to prevent any of the new myriad of laws and taxes passed to to address this from being repealed.

What happened under their policies is exactly what they warned would happen to the middle class if George Bush was elected to a third or fourth term (McCain, Romney, etc.), only without any economic growth. And who holds them accountable? No one.

Bigdog made an important point on the constitutional thread that that I will paraphrase here. Commerce has changed whether we like it or not. It has changed since the 1791, it has changed since I entered the export business 25 years ago and it is changing even more rapidly now. There is more upside and payoff for real innovations now than ever before, even if the economy is stalled, because the market for your innovation is now virtually the whole world. Meanwhile, more than at any time since women widely began working, a record number and proportion of the adult population completely out of the productive economy. People who are standing still aren't going to keep up with people who are either creating or following these changes. In a stagnant, rigid economy most people are standing still.

ccp: How does the right address this vs. big gov paychecks? Again ccp's commandment: Whoever can address this can win any election:

You have identified the two playing fields that the right will never win on. If the race is to see who will pay people the most to not work, or be accused of starving children and taking meds from Grannie, Republicans and free marketers won't win. If it is a contest to see who is perceived as best at tying the hands of new wealth with new laws, taxes and redistribution methods, Republicans have no chance in that contest either, except for a few R-in-name-only Senators.

To win with prosperity and economic freedom, you have to change the framing of the questions. For starters, trickle down is only a misnomer/caricature/pejorative of opponents' beliefs that the left puts on what they see as unrestrained freedom, not something that came out of the principles of economic freedom or supply side economics.

There is no answer to stopping income disparity while improving everyone else's outcome, and there is no valid reason to stop income disparity. If there was no disparity in what you see in other people's income, then there would be no hope in improving your own future.

I don't know how to explain a dynamic economy but if there is enough economic freedom, resources can flow to their best use which maximizes the opportunities for everyone. When you try to lock resources in place or direct them with central planners, the tyrants of our time, opportunities recede. Where is there an example on the planet or in history where the central planners out-performed economic freedom? Certainly not the US since the Pelosi-Reid-Obama-Hillary-Biden revolution of Nov 2006 that continues today.

BLS Labor force Unemployment rate not counting the 5 million people who left the workforce altogether

Thomas Sowell, 'Basic Economics': The actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. Money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners. In the absence of a profit motive, this activity does not occur.

I forget which thread on which it was I made the point, but I think fracking natural gas is a very good issue for us. We can make the point how it is bringing manufacturing back to the US (job! the American worker CAN compete! etc) but Obama and his command economy minions would rather funnel money to Solyndra.

Also, is there someone here who can take on for us reporting every month the unemployment rate INCLUDING those who have given up and left the economy altogether? Currently it is somewhere in the upper 10s if I am not mistaken.

I forget which thread on which it was I made the point, but I think fracking natural gas is a very good issue for us. We can make the point how it is bringing manufacturing back to the US (job! the American worker CAN compete! etc) but Obama and his command economy minions would rather funnel money to Solyndra.

It was in this thread. Agree! I would add that fracking is one piece of the economic freedom in energy puzzle. We need clean refineries, safe pipelines, secure grid, state of the art nuclear, and a healthy climate for bringing to market the innovations that come next - instead of trying to stop all these things. On a larger view, without getting wonky we need to articulate, as you suggest with Solyndra, a clearer definition of what is the private sector role, what is the public and federal role and why we should not blur these roles as we do now with the referees being both financier and regulator of selected teams and players.

On fracking, while the government regulators looked away, busy writing other regulations, our air got cleaner, CO2 emissions dropped significantly, dropped our trade imbalance, experienced regional job booms and improved the median standard of living more than TARP, QE, HARP and ACA combined- all without their help.

Who knew we could leap forward with one innovation in all those directions? Certainly not the central planners who pick winners and losers in places like Moscow, Beijing and Washington.

"You have identified the two playing fields that the right will never win on. If the race is to see who will pay people the most to not work, or be accused of starving children and taking meds from Grannie, Republicans and free marketers won't win. If it is a contest to see who is perceived as best at tying the hands of new wealth with new laws, taxes and redistribution methods, Republicans have no chance in that contest either, except for a few R-in-name-only Senators.

To win with prosperity and economic freedom, you have to change the framing of the questions. For starters, trickle down is only a misnomer/caricature/pejorative of opponents' beliefs that the left puts on what they see as unrestrained freedom, not something that came out of the principles of economic freedom or supply side economics.

There is no answer to stopping income disparity while improving everyone else's outcome, and there is no valid reason to stop income disparity. If there was no disparity in what you see in other people's income, then there would be no hope in improving your own future."

I have come up with some sort of overall thesis that might work for the right though I have not thought through (I don't know if frankly I am smart enough to quite figure it out) the details.I do believe the concept of freedom, hard work, and equal opportunity for all with *more* reasonable fairness for all can be the answer and acceptable to most Americans bar those who will always look for handouts or refuse to get over the entitlement philosophy.

I do not disparage those 1% who work hard are geniuses, lucky or have come up with honest formulas to be extraordinarily successful. Indeed I am jealous but also admiring of them. The problem as I see it as do so many other is the game is not fair. There is incredible dishonesty, cheating, lying, stealing, bribery and misuse of mail, eavesdropping and rigging the game. We can never stop all of it. My problem is as you have stated, the right *doesn't even acknowledge this* let alone speak of even and semblance of righting or leveling the playing field. That is the biggest mistake on the right and why they will always have to battle the left. The middle class, if you will, is struggling more then ever. To them the American Dream certainly has slipped away. When you have 75 % of the population living from paycheck to paycheck and the right only addresses this with abstract ideology about freedom opportunity and hard work they have far less chance of winning against a party that has sold its soul with buying votes. Just simply disparaging bigger and bigger government (I agree with this) without taking on private crooks and scoundrels is, I believe, a persistent and crucial mistake.

I don't know we need more regulation to level the playing field. Perhaps we simply need to enforce what we have. Not a single wall streeter went to jail. Corzine gets off without any criminal liability. Yet the average joe doesn't pay a small tax bill and he can be in jail.

We cannot keep ignoring this.

As for Chinese, Indians, and Blacks, and Latins who are overwhelmingly Democrat party types I don't know how much is racial (you get the white guy thing) but I think most is the benefits.

I guess we also have to lay the choice on the line. Do we want a country where everyone sits around feeling entitled or one we used to have where hard work and responsibility, without any guarantees, is the best way to go.I fear the former will win out. Especially if more and more of the population dwindles and struggles. And no, the answer is not simply "education" which is all we hear from the elites.

CCP, Good stuff, you make valid points especially regarding perception and winning people over.

"The problem as I see it as do so many other is the game is not fair. There is incredible dishonesty, cheating, lying, stealing, bribery and misuse of mail, eavesdropping and rigging the game."

It is not just that government doesn't prosecute what is wrong, but the government causes much of what is wrong. Regulations heavily favor the entrenched players by keeping out competition, and our crony government is loaded with 'public-private' relationships that fail every possible test of equal protection under the law. The examples are endless, Solyndra, Tesla, AIG, Goldman Sachs, earmarks and research grants down to sports stadiums and private takings at the local level. If government only governed, instead of promoting, participating, redistributing, and choosing sides and determining outcomes, this wouldn't happen.

CCP, continued: "The middle class...is struggling more then ever. To them the American Dream certainly has slipped away. When you have 75 % of the population living from paycheck to paycheck and the right only addresses this with abstract ideology about freedom opportunity and hard work they have far less chance of winning against a party that has sold its soul with buying votes. Just simply disparaging bigger and bigger government (I agree with this) without taking on private crooks and scoundrels is, I believe, a persistent and crucial mistake."

You are right. We didn't jail any wall street bankers and we didn't round up any local scheisters across the country from the housing scandal fraud. No one investigated, no one prosecuted and no investigative journalist effectively held their feet to the fire. We have a million laws and oversight committees but we failed to govern. The message of economic freedom did not land and did not win. I might add that it wasn't really attempted!

The question remains - separate from how rich people are doing - how do you improve the economic outlook for the lower 75%? The answer is found in the Heritage Economic Freedom Index. There are many dimensions that make up economic freedom and we can measure and compare them rather easily if we try. It may be a platitude but nothing else has lifted more people out of poverty or economic stagnation and into prosperity throughout history and across the globe better than market capitalism based on basic economic freedom.

The negative human emotional reaction to someone else making more money than us is what is stopping us from leaping forward into prosperity. If one is Judeo-Christian or Muslim, God already warned you about this: http://www.religioustolerance.org/chr10cisl.htm

Frankly, we can stay stuck on stupid or we can choose to unleash growth -it is a simple choice.

What did Democratic Pres. John F. Kennedy say? A rising tide lifts all boats? What was he proposing? Lowering tax rates, individual and corporate, easing the burden and market distortions of government on the private sector? "An economy hampered by restrictive tax rates will never produce enough jobs or enough profits." Remarks to the Economic Club of New York, December 1962 http://www.jfkexperience.com/jfk-resources/favorite-jfk-quotes/

After ranking as the world’s third freest economy behind Hong Kong and Singapore for most of the two decades from 1980-2000, the United States began to lose ground as the new millennium began. The report blames the slippage on “overspending, weakening rule of law, and regulatory overkill on the part of the US government.”

“Once considered a bastion of economic freedom,” the United States now ranks 17th in the world,” says the report, which was compiled using data from 2011. The current US ranking puts it 13 places lower than its 4th-place ranking in 1994, and 15 lower than in 2000, when it ranked second overall.

Meanwhile, Russia ranked 101st out of 151 nations, up 10 places from 1995 and 12 places better than its ranking in 2000, in the “Economic Freedom of the World” report, compiled by Canada’s Fraser Institute.

Russia has climbed up the rankings to be the best-placed of the rising economies known collectively as the BRIC countries (Brazil, India, China and Russia)-------------

Just before the recession hit in December of 2007 (Year 1 of the Pelosi-Reid, Obama, Biden, HRC majority congress) about 62.7 percent of the working-age population was working. If that same percentage was working today, we would have 154.1 million jobs. But we don’t. We have 144.2 million jobs and only 58.6 percent of the population is working. In short, we’re missing 9.9 million jobs when we compare this economy to the one in 2007.Who cares about 9.9 million jobs when you are attacking income inequality. Oops, that got worse too.

Se. Jeff Sessions Blasts Obamanomics

I have directed my staff on the Senate Budget Committee to conduct a detailed analysis of the economic conditions facing working Americans: their wages, their employment, their household finances. I will give a series of talks over the coming weeks looking at their financial condition and the state of our nation economically. I will also attempt to look at the causes leading to our current financial difficulties and suggest some steps to restore America’s financial future.

The sad fact is that the state of middle- and lower-income Americans is worsening on nearly every front. The slow growth of the economy (the slowest economic recovery from a recession since World War II) is restraining the normal upward movement in income that previous generations have experienced. And, if you don’t have a job, you’re twice as likely to only find part-time as full-time work—if you can find any work at all. …

Perhaps the single greatest source for economic anxiety for working Americans is the fear of losing their jobs.

It’s not just the unemployment rate, which remains too high at 7.3 percent in August 2013. It’s the number of people we all know who are working well below their potential because nothing is available that uses their job skills. It’s the number of people we know who have given up looking for work, or who are working part-time because nothing full-time is available for them.

Fewer people are working today than in 2007. That’s actual numbers—even though population has increased. Just before the recession hit in December of 2007, about 62.7 percent of the working-age population was working. If that same percentage was working today, we would have 154.1 million jobs. But we don’t. We have 144.2 million jobs and only 58.6 percent of the population is working.

In short, we’re missing 9.9 million jobs when we compare this economy to the one in 2007.

Here’s another way to look at the job problem: in 2007 we had 363,000 “discouraged workers”—people who had given up looking for work but had not yet disappeared from view by the Employment Security offices. Today we have 866,000. That an increase of 140 percent in six years.

Here’s still another barometer of middle class anxiety: we have 1,988,000 fewer full-time jobs today than in December of 2007. However, we have 3,627,000 more part-time jobs. People with part-time jobs are not counted as unemployed. …

Take a look at the median family’s income. The Census Bureau published new estimates of household income on Tuesday, August 17. They reported that the median income of American households, adjusted for inflation, stands at $51,017—lower than last year, lower than the year before, and, in fact, lower than any time since 1995. …

Many are concerned that the Federal Reserve is furthering the national wealth gap. Their “quantitative easing” has boosted wealth in the investor class but has not benefitted the working class. This is not the way our policies should work.

Another thing I would note is that our civil society today has certain weaknesses that we need to discuss. I will talk more about it in a separate speech, but let me share a few thoughts about why this weakness should concern us all.

Few social institutions are more important in helping us through difficult economic times than marriage. Marriage is disappearing in the bottom 50 percent of the income distribution. And, as it does, so does the presence of the father in the home. If you are in the bottom 50 percent and give birth, there is a greater than 50 percent chance that the father will not be living with you when the child comes home from the hospital. Perhaps, as many suggest, our welfare policies are exacerbating these trends.

Also worrying is the decline of charitable giving since 2007. Like the overall economy, this vital part of our social and economic system has failed to recover. Total charitable giving fell in 2008 to $303.8 billion from $326.6 billion in 2007. As of the end of 2012, total giving was only $316.2 billion… still 3 percent below its level of 6 years ago.

The road we are on today leads to the continued erosion of civil society, the continued expansion of the welfare state, and the permanent entrenchment of a political class that profits from the growth of government. It is time that we recognized both the disastrous conditions facing working Americans and the moral obligation we have to replace government dependency with the freedom and dignity that comes from work and independence.

By STEPHANIE CLIFFORD GAFFNEY, S.C. — The old textile mills here are mostly gone now. Gaffney Manufacturing, National Textiles, Cherokee — clangorous, dusty, productive engines of the Carolinas fabric trade — fell one by one to the forces of globalization.

Just as the Carolinas benefited when manufacturing migrated first from the Cottonopolises of England to the mill towns of New England and then to here, where labor was even cheaper, they suffered in the 1990s when the textile industry mostly left the United States.

It headed to China, India, Mexico — wherever people would spool, spin and sew for a few dollars or less a day. Which is why what is happening at the old Wellstone spinning plant is so remarkable.

Drive out to the interstate, with the big peach-shaped water tower just down the highway, and you’ll find the mill up and running again. Parkdale Mills, the country’s largest buyer of raw cotton, reopened it in 2010.

Bayard Winthrop, the founder of the sweatshirt and clothing company American Giant, was at the mill one morning earlier this year to meet with his Parkdale sales representative. Just last year, Mr. Winthrop was buying fabric from a factory in India. Now, he says, it is cheaper to shop in the United States. Mr. Winthrop uses Parkdale yarn from one of its 25 American factories, and has that yarn spun into fabric about four miles from Parkdale’s Gaffney plant, at Carolina Cotton Works.

Mr. Winthrop says American manufacturing has several advantages over outsourcing. Transportation costs are a fraction of what they are overseas. Turnaround time is quicker. Most striking, labor costs — the reason all these companies fled in the first place — aren’t that much higher than overseas because the factories that survived the outsourcing wave have largely turned to automation and are employing far fewer workers.

And while Mr. Winthrop did not run into such problems, monitoring worker safety in places like Bangladesh, where hundreds of textile workers have died in recent years in fires and other disasters, has become a huge challenge in terms of monitoring workers’ safety. “When I framed the business, I wasn’t saying, ‘From the cotton in the ground to the finished product, this is going to be all American-made,’ ” he said. “It wasn’t some patriotic quest.”

Instead, he said, the road to Gaffney was all about protecting his bottom line.

That simple, if counterintuitive, example is changing both Gaffney and the American textile and apparel industries.

In 2012, textile and apparel exports were $22.7 billion, up 37 percent from just three years earlier. While the size of operations remain behind those of overseas powers like China, the fact that these industries are thriving again after almost being left for dead is indicative of a broader reassessment by American companies about manufacturing in the United States.

In 2012, the M.I.T. Forum for Supply Chain Innovation and the publication Supply Chain Digest conducted a joint survey of 340 of their members. The survey found that one-third of American companies with manufacturing overseas said they were considering moving some production to the United States, and about 15 percent of the respondents said they had already decided to do so.

“This is a completely different manufacturing paradigm than what we saw 10 years ago,” said David Simchi-Levi, a professor at M.I.T. who conducted the survey.

Beyond the cost and time benefits, companies often get a boost with consumers by promoting American-made products, according to a survey conducted in January by The New York Times.

The survey found that 68 percent of respondents preferred products made in the United States, even if they cost more, and 63 percent believed they were of higher quality. Retailers from Walmart to Abercrombie & Fitch are starting to respond to those sentiments, creating sections for American-made items and sourcing goods domestically.

But as manufacturers find that American-made products are not only appealing but affordable, they are also finding the business landscape has changed. Two decades of overseas production has decimated factories here. Between 2000 and 2011, on average, 17 manufacturers closed up shop every day across the country, according to research from the Information Technology and Innovation Foundation.

Now, companies that want to make things here often have trouble finding qualified workers for specialized jobs and American-made components for their products. And politicians’ promises that American manufacturing means an abundance of new jobs is complicated — yes, it means jobs, but on nowhere near the scale there was before, because machines have replaced humans at almost every point in the production process.

Take Parkdale: The mill here produces 2.5 million pounds of yarn a week with about 140 workers. In 1980, that production level would have required more than 2,000 people.

Curse of Long Distance

When Bayard Winthrop founded American Giant, he knew precisely what he wanted to make: thick sweatshirts like the one from the Navy that his father used to wear.

They required a dry “hand feel,” so the fabric would not seem greasy to the touch, and a soft, heavily plucked underside. Mr. Winthrop had already produced sportswear overseas, so he looked there for the advanced techniques and affordable pricing he needed.

He wanted to sell his hooded sweatshirt for around $80, between the $10 Walmart version, made in China, and the $125 Polo Ralph Lauren version, made in Peru. He was insistent on cutting and sewing the sweatshirts in the United States — a company called American Giant couldn’t do that part overseas, he felt — but wasn’t picky about where the fabric came from.

With the help of a consultant, he settled on a mill in Haryana, India, that could make the desired fabric. After several months of back-and-forth, Mr. Winthrop was ready to ship his first sweatshirts in February 2012.

But he was frustrated with the quality, and the lengthy process. By October of last year, Mr. Winthrop had moved production to South Carolina. Now it takes just a month or so, start to finish, to get a sweatshirt to a customer.

“We just avoid so many big and small stumbles that invariably happen when you try to do things from far away,” he said. “We would never be where we are today if we were overseas. Nowhere close.”

The problems in India were cultural, bureaucratic and practical.

Time was foremost among them. The Indian mill needed too much time — three to five months — to perfect its designs, send samples, schedule production, ship the fabric to the United States and get it through customs. Mr. Winthrop was hesitant to predict demand that far in advance.

There were also communication issues. Mr. Winthrop would send the Indian factory so-called tech packs that detailed exactly what kind of fabric he wanted and what variations he would allow. But even with photos and drawings, the roll-to-roll variance was big. And he couldn’t afford to fly to India regularly, or hire someone to monitor production there.

He also found that suppliers deferred to his wishes, rather than being frank about some of his choices, which weren’t, he conceded, always good ones.

“I’m a supporter of outsourcing when it makes sense,” he said. But it had stopped making sense.

Now that production has shifted to the United States, Mr. Winthrop says those problems have disappeared. Mr. Winthrop and his team visit Carolina Cotton Works and Parkdale whenever they want, check on quality and toss ideas around with the managers. And, he says, the cost is less than in India.

Where Mr. Winthrop relies on labor — the cutting and sewing of the sweatshirts, which he does in five factories in California and North Carolina — is where the costs jump up. That costs his company around $17 for a given sweatshirt; overseas, he says, it would cost $5.50.

But truth be told, labor is not a big ingredient in the manufacturing uptick in the United States, textiles or otherwise. Indeed, the absence of high-paid American workers in the new factories has made the revival possible.

“Most of our costs are power-related,” said Dan Nation, a senior Parkdale executive.

March of the Machines

Step inside Parkdale Mills, and prepare to be overwhelmed by machines.

The ceilings are high and the machines stretch city block after city block — this one tossing around bits of cotton to clean them, that one taking four-millimeter layers from different bales to blend them.

Only infrequently does a person interrupt the automation, mainly because certain tasks are still cheaper if performed by hand — like moving half-finished yarn between machines on forklifts. Beyond that, there is little that resembles the mills of just a few decades ago.

Tell people about a textile plant and “their image is ‘Norma Rae,’ and everyone’s sick and dirty and coughing and it’s terrible,” said Mike Hubbard, vice president of the National Council of Textile Organizations.

Not here. The air-cleaning room, where air is washed 6.5 times an hour to get contaminants out, could be a modern-art installation, with liquid raining into pools of water. Along the ceiling, moving racks like those at a dry cleaner snake throughout the factory, carrying the finished yarn to a machine for packaging and shipping. That machine has enough lights and outlets on it that it resembles a music studio soundboard.

For Parkdale, the new technology has been its salvation.

Founded in 1916, Parkdale is the largest buyer of raw cotton in the United States. In the 1960s, when its current chairman, Duke Kimbrell, took over, it was a single plant with a couple of hundred workers.

Seeing that other plants in the area were streamlining their businesses and ceasing to make their own yarn, Parkdale supplied yarn to nearby manufacturers like Hanesbrands. Business flourished, and Parkdale acquired competitors and soared until the 1990s.

That’s when its clients started fleeing the United States.

The North American Free Trade Agreement in 1994 was the first blow, erasing import duties on much of the apparel produced in Mexico. The Asian financial crisis in the late 1990s, when currencies collapsed, added a 30 to 40 percent discount to already cheaper overseas products, textile executives said. China joined the World Trade Organization in 2001 and quickly became an apparel powerhouse, and as of 2005, the W.T.O. eliminated textile quotas.

In 1991, American-made apparel accounted for 56.2 percent of all the clothing bought domestically, according to the American Apparel and Footwear Association. By 2012, it accounted for 2.5 percent. Over all, the American manufacturing sector lost 32 percent of its jobs, 5.8 million of them, between 1990 and 2012, according to Bureau of Labor Statistics data. The textile and apparel subsectors were hit even harder, losing 76.5 percent of their jobs, or 1.2 million.

“With all the challenges that we’ve had with cheap imports, we knew in order to survive we’d have to take technology as far as we could,” said Anderson Warlick, Parkdale’s chief executive.

The company began meeting with machine manufacturers, doing trial runs of equipment and offering feedback and debugging, so it got dibs on the newest technology. It looked for business opportunities in the countries where its customers were heading, those in Central America in particular, and now 75 percent of its business is in exports.

Over all, the company employs 4,000 people, its biggest work force ever, but it is technology that has made it competitive.

“We’ve been able to be effective here because we invested in our manufacturing to the point that labor is not as big of an issue as far as total cost as it once was,” Mr. Warlick said. “It’s allowed us to be able to compete more effectively with foreign countries that pay, you know, a fraction of what we pay in wages. We compete with them on technology and productivity.”

Back From the Dead

All that automation has made working in the mill — which once meant mostly dead-end jobs for people with no other options — desirable for many people.

Howard Taggert, 86, got his first mill job in 1948 after high school. “By being a color, yeah, you’ve got the worst jobs there was in textile,” said Mr. Taggert, who is African-American. “It was rough, but it was a living. We made a living.”

He started by opening cotton bales, which involved striking an ax onto a metal tie around the bales — a dangerous job, given that a spark from metal striking metal could ignite a room full of cotton. The dust was so thick that he couldn’t see to the next aisle, he said. He was paid 87 cents an hour.

“I had to. I didn’t have no other choice,” he said of working in the mills.

The work was so bad that Mr. Taggert refused to let his children go into mill work. He might be surprised to hear about Donna McKoy, who went back to work in a mill even after earning an associate degree in criminal justice.

Ms. McKoy, 47, lost her job at Continental Fabrics in North Carolina in the early 2000s, “when everything was downsizing and going over to China.” In 2001 alone, textile plants in the Carolinas eliminated 15,000 jobs. The sense of desperation was palpable, Ms. McKoy said.

“Now what?” she remembers asking herself before she decided to go to college.

After a headhunter contacted her in 2007, she became a supervisor at Parkdale, overseeing a night shift of 11 workers. The work — and the workplace — are barely recognizable compared with her job a decade ago. A couple of things struck her right away. First, the mill was clean. “Most open-end spinning plants that have the older model spinning frames in them are really dirty and dusty and not fun to be around,” she said. Thanks to the new technology, “my plant is always clean.”

Second, Ms. McKoy got training. For her first eight months, Parkdale paid for hotels, food, dry-cleaning and gas for trips home as she rotated around different factories and learned all of the jobs. And there were fewer people. Ms. McKoy now works at a plant in Walnut Cove, N.C., which she described as a smaller version of the Gaffney plant. On a typical 12-hour shift, Ms. McKoy said, two of the 11 people on her team fix the spinning machines about 4,000 times, with robots’ help.

She earns $47,000 a year and says the perks are good, like health care, an in-house nurse and monthly management classes for supervisors. She recently bought a three-bedroom house and owns a car.

“I have a comfortable life,” she said. “With this recession that we just had, I didn’t feel it.”

Still, some Parkdale employees worry about the future. They’ve seen too much hardship in the textile industry to be overly hopeful about a real turnaround.

Scott Symmonds, 40, of Galax, Va., works as a technician for two plants in the area. He never planned on manufacturing work, but after time in the National Guard in Iraq, his home went into foreclosure and he had trouble getting work because of his low credit score and lack of a college degree. As a teenager in rural Iowa, he knew people who worked in manufacturing and watched two plants go out of business.

“I saw how they would come home dirty, smelly and often injured,” he said. “I didn’t want that.”

But he needed a job, and Parkdale was hiring. Mr. Symmonds started as a spinner, then got a job on the packing line, and then snagged a technician’s job after a technical-aptitude test. He earns $15 an hour, which he says is better than what competitors pay. He fears, though, that his higher pay could become a liability.

“We are making far more money than our counterparts in China or other nations,” he said. “We can’t afford to take a big enough cut in pay to be on an even level with those places.” ■

The sluggish performance of the economy since the Great Recession is likely to persist in the coming years. The foundations of growth are all simultaneously getting weaker.

To understand the basis for this conclusion, let’s break down measured economic growth—typically expressed as the annual rate of increase in real, or inflation-adjusted, gross domestic product (GDP) per capita—into the constituent elements tracked by conventional growth accounting: (1) growth in labor participation, or annual hours worked per capita; (2) growth in labor quality, or the skill level of the workforce; (3) growth in capital deepening, or the amount of physical capital invested per worker; and (4) growth in so-called total factor productivity, or output per unit of quality-adjusted labor and capital....If conditions for growth really have deteriorated, then the public policies that delivered a certain rate of growth in the past will no longer suffice to maintain that growth rate in the future. In other words, policies that are more friendly to long-term growth will be neededif more robust growth is to be revived. In the quest to improve the U.S. economy’s growthprospects, the lowest-hanging fruit now appears to be policy change....24 page pdf: http://object.cato.org/sites/cato.org/files/pubs/pdf/pa737_web_1.pdf

Brink Lindsey is a senior fellow at the Cato Institute and the author, most recently, of Human Capitalism: How Economic Growth Has Made Us Smarter—and More Unequal

I have tried (about a dozen times on the forum) to make the point that the income inequality measures widely published and cited are a farce, not including income of the poor and greatly exaggerating income the rich. Income that belongs to the IRS and others is not their income. In the category of famous people reading the forum, economists and columnists for research institutions such as AEI are jumping in to back me up on this. I thank them.

This is important stuff. It is the foundation for the liberal argument of why the free market and Republican policies are so unfair.

Income inequality is the existence of an economic ladder, available for all to climb, not evidence of unfairness. Perfectly equal outcomes is the worst possible outcome and could happen only if effort, talent, investment, incentive, disincentive, risk and reward have no meaning. Equality could exist only with everyone at the bottom in poverty. Do liberals ever consider what the opposite of income equality would mean.

From the article (with occasional comment):

"The official measure...doesn’t include (the main income of lower income people) non-cash benefits, like food stamps or Medicaid and Medicare and it doesn’t take into account taxes (the multi-trillion dollar equalizer against the rich). (One example:) So when part of the federal response to the recession was to reduce taxes, particularly the payroll tax, that isn’t incorporated into the official measure. When you do take into account those things, you find that disposable income for the middle class was back to its 2007 level in 2011. We’ve actually fully recovered. If you look at the bottom, that too looks like it’s recovered to its 2007 level. It depends on how you value Medicaid and Medicare..."

"If you think that government ought to be redistributing money or providing a safety net during downturns, that’s exactly what it did"..."Burkhauser and his colleagues start with those numbers, which include the capital gains that people realize when they sell assets like stocks. That’s a big part of the story because the stock market has done well over these past few decades. When the stock market is at a peak, people sell and realize these big gains that have been accumulating over time. Instead of showing gradual increases in income over time, they show up as these spikes when the market peaks and people sell. It will also show up as spikes when tax policy changes affect the returns to come of these investments.

Rich and his colleagues said, “Let’s take into account year by year capital gains that are accruing to people, many of which are behind the scenes because people are not actually selling these assets.” By the way, in some years, there are capital losses that we don’t see because of the 2008 financial crisis where there are these huge losses at the top. When they attempted to account for the accrued gains and losses behind the scenes, they found that inequality has not risen from 1989 to 2007."..."The income growth for the middle class has been stronger than people realize. Since about 1979 it’s gone up about 40 percent."

Unmentioned in the piece is that the slowdown in income mobility up for the lower incomes was caused by the safety hammock of the programs. Extravagant programs require limits on other income and many people in them face effective marginal tax rates way over 100% for additional dollars of income. Great incentive to climb.

More Redistributed Than EarnedAccording to the latest census data, more Americans now depend on government support than earned income. As of 2012, 151 million Americans receive government support, while 125 million earn a paycheck. Of course, there are some 50 million who receive earned support in the form of Social Security, Medicare and Veteran benefits. So as it stands now, 100 million Americans depend on the government for subsistence. Some 82 million receive Medicaid welfare (and that number is going up as a result of O'Care), 35 million receive food and shelter subsidies, and 5 million receive unemployment checks.

What would be Obama's no growth record (0.019 growth) nationally without the pro-growth efforts of 30 Republican governors, majorities of Republican legislatures, Republican House, etc.? What if Obama and Detroit-style policies governed everywhere across the fruited plain, what would be his economic record?

"... The bad news for blue states: Not one ranks in the top 10 based on overall economic outlook as gauged by 15 economic indicators, including tax rates, regulatory burden and labor policies. Eight of the top 10 slots are held by GOP-dominated red states, led by Utah, while two are politically mixed “purple” states, Florida and Virginia [Who both have Republican Governors].

On the other hand, the list of the bottom 10 is dominated by blue states. Vermont, a solidly blue state, ranks last in terms of economic outlook, and only one red state — Montana — makes the bottom 10. [Montana has a Democrat Governor.]

Every year, new estimates of the incomes of the “top 1 percent” are reported with the requisite fanfare from Thomas Piketty of the Paris School of Economics and Emmanuel Saez of the University of California, Berkeley. And every year the press gets the numbers all wrong.

“Worry Over Inequality Occupies Wall Street,” writes Justin Lahart of the Wall Street Journal. An odd worry, when stocks keep hitting record highs. In reality, top income shares always rise and fall with the stock market because of capital gains, stock options, and bonuses and fees tied to stocks.

“Messrs. Piketty and Saez,” says Lahart, “show the top 1 percent captured 19.3% of U.S. income in 2012. The only year in the past century when their share was bigger was 1928, at 19.6%.” That comparison is incredibly misleading. Piketty and Saez don’t include $2.3 trillion of transfer payments in “U.S. income,” even though transfers accounted for over 16 percent of personal income in 2009 and almost zero in 1928.

Extolling Piketty and Saez as “everyone’s favorite inequality-tracking researchers,” Dylan Matthews of the Washington Post writes, “Shockingly — shockingly — what [Piketty and Saez] found is that while only 49 percent of the decline in incomes during the recession was born [sic] by the top 1 percent (whose income share fell to 18.1 percent due to the recession), 95 percent of income gains since the recovery started have gone to them.”

There is an interesting story in these numbers, but it is not a story journalists choose to report. It turns out that the same table Matthews reprinted from Piketty and Saez shows the top 1 percent’s real income fell by 36.3 percent from 2007 to 2009, then rose by only 31.4 percent from 2009 to 2012. The 36.3 percent decline, of course, was calculated from a much larger base than the subsequent 31.4 percent recovery.

Since top incomes fell more than they rose, you might expect the Post’s Mr. Matthews to note that over the whole period, the net change was a decline in top incomes rather than an increase. Down is not up, even in economic journalism. Yet every major media outlet, even The Economist and the Wall Street Journal, gullibly reported the data — adding up to a five-year decline — as evidence the rich are continually getting richer.

The table shown here — which uses Piketty and Saez’s data — shows the top 1 percent’s average real income fell by 16.3 percent from 2007 to 2012, and ended up 6.4 percent lower than it was back in 2000:

What about the “other 99 percent,” whose income supposedly rose by only 0.4 percent from 2009 to 2012? Piketty and Saez compare real incomes at different income levels without including Social Security, unemployment and disability benefits, food stamps, Medicaid, etc. Government transfers totaled $2.3 trillion in 2012, up 24.6 percent in real terms from 2007 and up 68 percent since 2000. Because Piketty and Saez estimate only pre-tax, pre-transfer income, they also ignore $149 billion in Treasury checks to lower-income families from refundable tax credits. They’ll also ignore huge Obamacare subsidies next year.

Once transfers and taxes are properly taken into account, my own research for the Cato Institute shows no clear trend toward greater inequality after 1989, aside from the tech-stock boom of 1998–2000. Instead of any predictable trend, data on income shares are dominated by cyclical variations in which rich and poor rise or fall together: When the top 1 percent’s share rises, the poverty rate falls, and when the top 1 percent’s share falls, the poverty rate rises.

There are numerous conceptual and measurement problems with attempting to judge the relative living standards of the rich, middle-class, and poor by relying on income reported on individual tax returns (ignoring, for a start, income that’s unreported or reported on corporate returns).

Saez himself has hinted that the seemingly strong surge in top-percentile incomes in 2012, for example, was largely a matter of strategic tax timing — reporting bonuses and capital gains in 2012 to avoid higher tax rates in 2013. The same thing happened in late 1992, when professionals and executives arranged to cash in bonuses and stock options in December rather than in January 1993, when income-tax rates went up. It also happened in 1986, when investors rushed to cash in capital gains before the capital-gains tax went up, briefly inflating reported real income of the top 1 percent by 34.6 percent in a single year.

Because reported capital gains and bonuses were similarly shifted forward from 2013 to 2012, we can expect a sizable drop in the top 1 percent’s reported income when the 2013 estimates come out a year from now. The befuddled media will doubtless figure out some way to depict that drop as an increase.

Everyone including our unaware President knows that small business is the driver of jobs and job growth. Yet...

"When those [businesses] with between 40 and 70 employees were asked about the 50 full-time-equivalent cutoff between having to offer those working at least 30 hours per week health insurance and not having to offer those employees health insurance, a majority plan to ensure they either remain below or drop below that threshold by 2015."

Who knew this would happen??!!----------------------------------------The U.S. Chamber of Commerce and the International Franchise Association commissioned Public Opinion Strategies to conduct a poll of decision-makers at businesses, both franchise-owned and non-franchise-owned with 40 to 500 employees. The 414 surveyed, representative of the employers of over 25% of the populace and the group of employers most affected by the provisions of ObamaCare, give lie to the administration’s claim that ObamaCare will not negatively affect, and is not already negatively affecting, the job market:

- Many businesses are already seeing their health care costs increasing because of the law. To cope, 31% of franchise and 12% of non-franchise businesses have already reduced worker hours, a full year before the employer mandate goes into effect.

- Additionally, 27% of franchise and 12% of non-franchise businesses have already replaced full-time workers with part-time employees. Other cost control methods cited by survey participants included hiring only temporary help and cutting benefits and bonuses.

When those with between 40 and 70 employees were asked about the 50 full-time-equivalent cutoff between having to offer those working at least 30 hours per week health insurance and not having to offer those employees health insurance, a majority plan to ensure they either remain below or drop below that threshhold by 2015.

On a cold October morning, just after the federal government shutdown came to an end, Jenner Barrington-Ward headed into court in Boston to declare bankruptcy. It took weeks to put the paperwork together, given that her papers and belongings were scattered across the country — there was a broken-down car and boxes of paperwork in Virginia Beach, clothes in Colorado and personal possessions at a friend’s house in Somerville, Mass. She managed to estimate her income — maybe $5,000 last year, but maybe half that this year — from odd jobs. Soon, she would officially have nothing.

It has been a painful slide. A five-year spell of unemployment has slowly scrubbed away nearly every vestige of Ms. Barrington-Ward’s middle-class life. She is a 53-year-old college graduate who worked steadily for three decades. She is now broke and homeless.

Ms. Barrington-Ward describes it as “my journey through hell.” She was laid off from an administrative position at the Massachusetts Institute of Technology in 2008; she had earned about $50,000 that year. With the recession spurring employers to dump hundreds of thousands of workers a month and the unemployment rate climbing to the double digits, she found that no matter the number of résumés she sent out — she stopped counting in the thousands — she could not find work.

“I’ve been turned down from McDonald’s because I was told I was too articulate,” she says. “I got denied a job scrubbing toilets because I didn’t speak Spanish and turned away from a laundromat because I was ‘too pretty.’ I’ve also been told point-blank to my face, ‘We don’t hire the unemployed.’ And the two times I got real interest from a prospective employer, the credit check ended it immediately.”

For Ms. Barrington-Ward, joblessness itself has become a trap, an impediment to finding a job. Economists see it the same way, concerned that joblessness lasting more than six months is a major factor preventing people from getting rehired, with potentially grave consequences for tens of millions of Americans.

The long-term jobless, after all, tend to be in poorer health, and to have higher rates of suicide and strained family relations. Even the children of the long-term unemployed see lower earnings down the road.

The consequences are grave for the country, too: lost production, increased social spending, decreased tax revenue and slower growth. Policy makers and academics are now asking whether an improving economy might absorb those workers in time to prevent long-term economic damage.

“I don’t think we know the answer,” said Jesse Rothstein, an economist at the University of California, Berkeley. “But right now, I think everybody’s worst fears are coming true, as far as we can tell.”

Soon after we first talked in October, Ms. Barrington-Ward left her sister’s house in Ohio, where she had crashed for six weeks, and went back to Boston and filed her bankruptcy paperwork. She contacted a headhunter. “I’ve got to get a job,” she said. “I just have to.” She had two job interviews lined up and her fingers crossed. Long-term joblessness — the kind that Ms. Barrington-Ward and about four million others are experiencing — is now one of the defining realities of the American work force.

The unemployment rate has fallen to 7.3 percent, down from 10 percent four years ago. Private businesses have added about 7.6 million positions over the same period. But while recent numbers show that there are about as many people unemployed for short periods as in 2007 — before the crisis hit — they also show that long-term joblessness is up 213 percent.

In part, that’s because people don’t return to work in an orderly, first-fired, first-hired fashion. In any given month, a newly jobless worker has about a 20 to 30 percent chance of finding a new job. By the time he or she has been out of work for six months, though, the chance drops to one in 10, according to research by the Federal Reserve Bank of San Francisco.

Facing those kinds of odds, some of the long-term jobless have simply given up and dropped out of the labor force. So while official figures show that the number of long-term jobless has fallen steeply from its recessionary high of 6.7 million, many researchers fear that this number could mean as much bad news as good. Workers over 50 may be biding their time until they can start receiving Social Security. Younger workers may be going to school to avoid a tough job market. Others may be going on disability, helping to explain that program’s surging rolls.

Stan Hampton, 59, a veteran of the Iraq war, is now earning his associate degree. But he has not had a job since returning from active duty in 2007, and is now living in an apartment complex for veterans near Las Vegas.

“I’m just trying to hang on until my retirement kicks in,” he said, though he stressed that he would still look for a job. “I have not been in jail or prison, nor am I an alcoholic, drug addict or gambling addict. I am simply old, unemployed and out of money.”

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To answer the question of whether the improving economy might help people like Mr. Hampton and Ms. Barrington-Ward, economists often phrase the question as “Is it structural or cyclical?” Cyclical unemployment is temporary, caused by a slack economy. Structural unemployment stems from a mismatch between what businesses want and what workers offer. You are a car mechanic, for example, but the economy needs programmers.

If long-term joblessness is cyclical, a growing economy should bring people back into the job market. But if structural factors are at play, the concern is dire for the whole economy, with a normal unemployment rate “significantly higher than what has been achieved in the past,” said Janet L. Yellen, the presumptive new Federal Reserve chairwoman, in a speech this year.

Right now, most economists argue that unemployment remains primarily cyclical. Ben S. Bernanke, the departing Fed chairman, made this point last summer, adding that an unemployment rate in the 5 percent range — an indication of a healthy economy — was still obtainable. Growth simply hasn’t proved strong enough to spur businesses to hire all the people who want jobs.

Economists come to this conclusion in part because there is no evidence that the long-term jobless are accumulating in any one industry, which would be a signal that the economy needs to move workers from, say, manufacturing into nursing. Long-term unemployment has hit workers young and old, of all industries, races and backgrounds. But the long-term jobless actually tend to be more educated. And long spells of joblessness have hit black workers especially hard, as well as single parents, the disabled and older workers.

With time, however, even people with desired skills can become “structurally” unemployed. Longer spells of unemployment become harder to explain away. Jobless workers’ skills can atrophy. Job seekers find it harder to appear eager. Wounds become scars.

After she lost her job, Ms. Barrington-Ward lived off her 99 weeks of unemployment benefits. Two years ago, she had to give up the house she shared with friends outside Boston. She cannot get Medicaid because she does not have a fixed address. She has no car to get around. She does freelance “intuitive” readings, similar to psychic readings, and web production work. A jobless friend committed suicide.

She tries not to let those strains show, but she describes the experience as wearying. “After working since I was 15, I have nothing to show for it,” she said.

“She’s brilliant,” said Allyson Hartzell, a longtime friend with whom Ms. Barrington-Ward is currently staying. “She gets up in the morning. She has her tasks. She’s always working on her personal projects, trying to generate money. She goes to job interviews. She keeps herself in shape.”

Ms. Hartzell continued: “I think it’s emotionally difficult to handle so much rejection, and I think others sometimes feel she needs to justify why she’s in the position she’s in.”

Economists have long thought that the strain of unemployment, plus the erosion of skills and loss of contacts that naturally occur, helps explain the “structural” unemployed in a nation’s work force. But new evidence shows that bias plays a much larger role than previously thought. Some of the long-term unemployed might never find work because businesses simply refuse to hire them.

In a recent study, Rand Ghayad a Ph.D. candidate at Northeastern University, sent out 4,800 dummy résumés to job postings. Those résumés that were supposedly from recently unemployed applicants with no relevant experience were more likely to elicit a call for an interview than those supposedly from experienced workers out of a job for more than six months. Indeed, the callback rate for the long-term jobless ranged from just 1 to 3 percent, versus 9 to 16 percent for newly unemployed workers.

Unemployment becomes a “sorting criterion,” in the words of a separate study with similar findings. It found that being out of a job for more than nine months decreased interview requests by 20 percent among people applying to low- or medium-skilled jobs.

In dozens of interviews, the long-term unemployed described discrimination as being foremost in their minds, though at the same time they said the experience of joblessness had changed them.

Robin Hastey, 53, who lives in Cornwall, N.Y., lost her job in 2009 and has not found steady work since. Her husband went through a spell of unemployment, but eventually found a job that paid half of what he made in the 1990s. They are deeply in debt, she said, estimating that they have about $100 in their bank account.

We look older,” she said. “I’m not as cute. People aren’t as forgiving. When I was young, you could ask stupid questions and people would hire you anyhow. Now, you’re just a crazy old lady. There’s a lot less forgiveness in the marketplace.”

Still, the slack economy remains the primary culprit behind all the pain in the labor market, economists say. “We’ve got to be doing everything we can,” said Professor Rothstein at Berkeley. “That means direct hiring”— with the government providing jobs — “employment tax credits, just about anything you could think of.”

But the government is now doing the opposite. The mandatory federal budget cuts known as sequestration took as much as 60 percent out of unemployment checks this summer and fall. And, as of this winter, the federal emergency program that extends the maximum number of weeks of jobless payments will end, though the White House is pushing to extend it again.

Some fear that it may already be too late to prevent long-term joblessness from permanently scarring the American work force and broader economy. International Monetary Fund researchers estimate that the level of structural unemployment has increased significantly since the recession. And striking new Federal Reserve research shows that the scars from the recession have knocked the economy off its long-term growth trend.

For the long-term jobless, there is little to do but hope and wait. When I visited Ms. Barrington-Ward in November, she was planning to produce a show for Somerville Community Access Television. Unemployment itself consumes a lot of time. “I’ve been in seven states over the last five years, living with friends and family,” she said. “I usually stay somewhere for three weeks maximum. People want me to leave but don’t want to ask me to leave.”

She never got a second interview for one of the two positions for which she applied. She wrote a detailed plan for and had phone conversations about the other job, this one at a web start-up. She offered to work on a consulting basis. The company told her that it would go with a temp.

On a cold evening in Somerville, she sipped a mocha she had bought with a coupon. She had not given up — not quite. But she was disappointed that jobs hadn’t panned out. Again.

“I just know I’m not going to get another full-time job again,” she said. “It’s just so hard.” She had to leave her friend’s house soon. She did not know where she would go.

"staying put and doubling up with roommates or living with Mom and dad"Hey young liberals, how is Hope and Change workin' out for you-all?-------------------------------------------------------------------------------------Economic woes for young people means less mobilityBy The Associated PressNovember 14, 2013

WASHINGTON (AP) - U.S. mobility for young adults has fallen to the lowest level in more than 50 years as cash-strapped 20-somethings shun home-buying and refrain from major moves in a weak job market.

The new 2013 figures from the Census Bureau, which reversed earlier signs of recovery, underscore the impact of the sluggish economy on young people, many of them college graduates, whom demographers sometimes refer to as "Generation Wait."

Burdened with college debt or toiling in low-wage jobs, they are delaying careers, marriage and having children. Waiting anxiously for their lucky break, they are staying put and doubling up with roommates or living with Mom and dad, unable to make long-term plans or commit to buying a home - let alone pay a mortgage.

Many understood after the 2007-2009 recession that times would be tough. But few say they expected to be in economic limbo more than four years later.

Among adults ages 25-29, just 4.9 million, or 23.3 percent, moved in the 12 months ending March 2013. That's down from 24.6 percent in the same period the year before. It was the lowest level since at least 1963. The peak of 36.7 percent came in 1965, during the nation's youth counterculture movement.

The past year's decline in migration came after a modest increase from 2011 to 2012, a sign that young adults remain tentative about testing the job market in other cities.

By metropolitan area, Portland, Ore., Austin, Texas, and Houston were among the top gainers in young adults, reflecting stronger local economies. Among college graduates 25 and older, Denver and Washington, D.C., topped the list of destinations.

Demographers say the delays in traditional markers of adulthood - full-time careers and homeownership - may prove to be longer-lasting.

Roughly 1 in 5 young adults ages 25 to 34 is now disconnected from work and school.

"Young adulthood has grown much more complex and protracted, with a huge number struggling to reach financial independence," said Mark Mather, an associate vice president at the private Population Reference Bureau. "Many will get there, but at much later ages than we've seen in the past. More and more we're seeing many young adults routinely wait until their 30s to leave the parental nest."

The overall decline in migration among young adults is being driven largely by a drop in local moves within a county, which fell to the lowest level on record. Out-of-state moves also fell, from 3.8 percent in 2012 to 3.4 percent, but remained higher than a 2010 low of 3.2 percent.

Young adults typically make long-distance moves to seek a new career, while those who make local moves often do so when buying a home.

While homeownership across all age groups fell by 3 percentage points to 65 percent from 2007 to 2012, the drop-off among adults 25-29 was much larger - more than 6 percentage points, from 40.6 percent to 34.3 percent. That reflects in part tighter lines of credit after the 2006 housing bust. Declines in homeownership for those ages 40 and older over in that five-year period were more modest.

William H. Frey, a demographer at the Brookings Institution analyzed the figures:"Many young adults, especially those without college degrees, are still stuck in place.""For them, low mobility might be more than a temporary lull and could turn into the 'new normal.'"

I dunno. Leftism is more of a mental illness than an ideology when you boil it down to it's essence. Detroit never wavered from being hardcore dem. NYC is diving headfirst into becoming a background for a Snake Plisken movie. Chicago is only a few steps behind Detoilet and California is chasing away their last few businesses, including porn.

Spend any time around monetary officials and one word you’ll hear a lot is “normalization.” Most though not all such officials accept that now is no time to be tightfisted, that for the time being credit must be easy and interest rates low. Still, the men in dark suits look forward eagerly to the day when they can go back to their usual job, snatching away the punch bowl whenever the party gets going.

But what if the world we’ve been living in for the past five years is the new normal? What if depression-like conditions are on track to persist, not for another year or two, but for decades?

You might imagine that speculations along these lines are the province of a radical fringe. And they are indeed radical; but fringe, not so much. A number of economists have been flirting with such thoughts for a while. And now they’ve moved into the mainstream. In fact, the case for “secular stagnation” — a persistent state in which a depressed economy is the norm, with episodes of full employment few and far between — was made forcefully recently at the most ultrarespectable of venues, the I.M.F.’s big annual research conference. And the person making that case was none other than Larry Summers. Yes, that Larry Summers.

And if Mr. Summers is right, everything respectable people have been saying about economic policy is wrong, and will keep being wrong for a long time.

Mr. Summers began with a point that should be obvious but is often missed: The financial crisis that started the Great Recession is now far behind us. Indeed, by most measures it ended more than four years ago. Yet our economy remains depressed.

He then made a related point: Before the crisis we had a huge housing and debt bubble. Yet even with this huge bubble boosting spending, the overall economy was only so-so — the job market was O.K. but not great, and the boom was never powerful enough to produce significant inflationary pressure.

Mr. Summers went on to draw a remarkable moral: We have, he suggested, an economy whose normal condition is one of inadequate demand — of at least mild depression — and which only gets anywhere close to full employment when it is being buoyed by bubbles.

I’d weigh in with some further evidence. Look at household debt relative to income. That ratio was roughly stable from 1960 to 1985, but rose rapidly and inexorably from 1985 to 2007, when crisis struck. Yet even with households going ever deeper into debt, the economy’s performance over the period as a whole was mediocre at best, and demand showed no sign of running ahead of supply. Looking forward, we obviously can’t go back to the days of ever-rising debt. Yet that means weaker consumer demand — and without that demand, how are we supposed to return to full employment?

Again, the evidence suggests that we have become an economy whose normal state is one of mild depression, whose brief episodes of prosperity occur only thanks to bubbles and unsustainable borrowing.

Why might this be happening? One answer could be slowing population growth. A growing population creates a demand for new houses, new office buildings, and so on; when growth slows, that demand drops off. America’s working-age population rose rapidly in the 1960s and 1970s, as baby boomers grew up, and its work force rose even faster, as women moved into the labor market. That’s now all behind us. And you can see the effects: Even at the height of the housing bubble, we weren’t building nearly as many houses as in the 1970s.

Another important factor may be persistent trade deficits, which emerged in the 1980s and since then have fluctuated but never gone away.

Why does all of this matter? One answer is that central bankers need to stop talking about “exit strategies.” Easy money should, and probably will, be with us for a very long time. This, in turn, means we can forget all those scare stories about government debt, which run along the lines of “It may not be a problem now, but just wait until interest rates rise.”

More broadly, if our economy has a persistent tendency toward depression, we’re going to be living under the looking-glass rules of depression economics — in which virtue is vice and prudence is folly, in which attempts to save more (including attempts to reduce budget deficits) make everyone worse off — for a long time.

I know that many people just hate this kind of talk. It offends their sense of rightness, indeed their sense of morality. Economics is supposed to be about making hard choices (at other people’s expense, naturally). It’s not supposed to be about persuading people to spend more.

But as Mr. Summers said, the crisis “is not over until it is over” — and economic reality is what it is. And what that reality appears to be right now is one in which depression rules will apply for a very long time.

"The no-decision on the Keystone XL pipeline and its union jobs; the 2,000-page regulatory law draped in 2010 across the entire financial sector; the shutdown in 2010 and then the slow-walking of offshore oil drilling; siccing the EPA on the utilities industry and the National Labor Relations Board on all industry; a 2010 FCC decision to regulate Internet growth; a significant tax increase this year; support this month for jacking up the federal minimum wage to over $10, certain to smother new jobs; the Justice Department's $13 billion looting of J.P. Morgan JPM -0.47% bank; and of course Hurricane ObamaCare."

"The reason I keep harping on income inequality is because the false analysis of it is used as the foundation for all leftist economic policies, including the ones that are holding us back today." - yours truly, 11/13/2013http://dogbrothers.com/phpBB2/index.php?topic=1467.msg76990#msg76990" No clear trend toward greater income inequality since 1989"

Pope Francis is an expert on poverty; he has lived within and around it all his life. The President is an expert on demagoguing wealth; he rose to great heights doing that. The Pope does not know how to solve the condition of poverty and the President does not know how to solve the false problem of income inequality.

As George Gilder and others have pointed out, poverty is not something in itself to study or know. Poverty is the lack of something - the lack of wealth. You don't learn about poverty by studying poverty. You learn about it by studying wealth and wealth creation. Then go back to poverty to see what elements of wealth creation are missing.

Income inequality isn't the study of any one phenomenon. It is the study of two unrelated phenomena and meaninglessly comparing them.

How much do people who do not participate or fully participate in our economic system make? Don't count all the assistance we already give them in trying to alleviate the condition. How much do other people make who have fully committed, invested and succeeded? Don't count what we take from them that they don't get to keep or reinvest. Income Inequality is the stunning revelation that the people who make more money, make more money than the people who make less money.

Removal of income inequality is the removal of a ladder up. What you earn now is all you will ever aspire to earn. Education, saving, investing, hard work, commitment, innovation, surrounding yourself with the best people you can find, persistence, perseverance - all would make no difference.

You do not and cannot fight poverty or economic under-performance by taking down wealth. What you do is lock in that success, find what is working for the top 40% and make it available to the rest.

A war on income inequality is a war on wealth. A successful war on wealth means that poverty will be even more widespread. Instead of celebrating and wealth creation and spreading it to others, we punish it, demonize it, and instead reward the opposite - in all its manifestations.